Smaller retail

1. Smaller retail chains have several competitive advantages over larger retail chains. First of all, smaller stores can offer nicer shopping environment, and a shoppers’ survey revealed that almost a half of all customers were ready to pay more for such an advantage. Customers get increasingly tired of standardized shopping environment and product selection.

Other advantages include the possibility to offer more personalized and customized products. Small stores can introduce more interactive merchandizing strategies. Furthermore, shopping can be regarded as a part of community life, and one of the recent trends is that local grocery stores are becoming more important arenas of community life than huge malls. That can be attributed to the influx of immigrants from the Middle East and certain parts of Asia where close relations between small retailers and community is a fact of social life.

2. Specialty stores are enjoying mounting popularity in case they are successful in filling in a niche that cannot be taken by a larger retailer. There are some products that are not sold through large retailer chains. Additionally, shoppers are trying to find products that are custom and unique. This is especially true for certain categories of products, like gifts or accessories. There is a growing sentiment in the society against mass products, since every person is willing to highlight his or her individual style and preferences.

3. Niche strategy can lead to breathtaking success for small retailers, but there are also many risks associated with the pursuit of such strategy. There are many individuals and businesses that have needs underserved by large retail chains. Occupying a certain niche ensures small retailer’s near-monopolistic market position, at least in a given area (it may become a category killer). Thus, the retailer might employ price skimming strategy and reap considerable benefits. However, the risk of such a strategy is associated with the fact that narrow specialization might result in the lack of demand for some products and services. Another risk is that retailer’s offerings might go out of fashion. Finally, there is also a possibility that retailer’s success might attract competitors, and retailer’s offerings won’t be unique anymore.

4. Brick-and-click retailing is more effective than brick-only retailing for the simple reason that diversification of distribution channels results in more sales. Products are becoming accessible to a greater fraction of the population; furthermore, many customers find it more convenient and time-saving to shop online.

From the point of view of theoretical marketing, out of the four classic elements of the marketing mix, place (i.e. the distribution channel) is paid close attention. Highlighting the differences between single-channel and multi-channel retailing, the chapters focus on exploring both store strategy mixes and non-store strategy mixes, e.g. direct marketing, direct selling, vending machines, video kiosks, and airport retailing.

Principles applied in the chapters include: 1. principle that every retailer should strive to become category killers; 2. that retailers generally benefit from diversification of distribution channels; 3. that all the elements of retailing mix should be present in a marketing strategy and interact effectively to generate synergy; 4. that at every stage of retail lifecycle appropriate strategies should be employed; 5. that companies benefit from cost containment and value-driven retailing; 6. that ownership plays a considerable role in the choice of retailing strategy; 7. that customer relations are important for any form of retailing; 8. that companies should strive to exert influence in distribution channels.

References

Berman and Evans. Retail Management: A Strategic Approach, Tenth Ed. Upper Saddle River, N.J.: Prentice Hall, 2007.